(Business in Cameroon) - On August 28, 2023, Cameroon Water Utilities (Camwater) and Chinese company CGCOC Group CO Ltd signed an amendment to the commercial contract covering the upcoming project to supply drinking water to the towns of Maroua, Garoua, Garoua-Boulai, Yabassi and Dschang. The amendment increases the project costs by CFAF10.593 billion, we learn from the press kit prepared for the signing ceremony held in Garoua-Boulai, in the east of the country. This brings the cost of the project to around CFAF63 billion.
The additional amount, which is 20% of the previously estimated costs, will be borne by Cameroon. For the time being, the mechanisms to be adopted to mobilize the funds are still being discussed by the Ministry of Energy and Water (Minee), the Ministry of the Economy, Planning and Regional Development (Minepat), and the National Sinking Fund (CAA).
The initial costs are to be funded by a loan of 594 million yuan (or CFAF49.2 billion FCFA at the current yuan value) from state-owned bank Eximbank China. Its loan agreement was signed on September 22, 2018, with a 7-year grace period and a 2% interest rate, according to the CAA.
"Given the changes in prices between the year the estimate was made (2011) and today, an analysis of the cost structure was carried out, under the supervision of Minepat, Minee, and Mincommerce. This resulted in an additional cost of around CFAF10.59 billion FCFA, which is necessary for the smooth completion of the work," explains Camwater, justifying the amended costs.
The project is the second phase of a larger supply project. Its foundation stone was laid on August 28, 2023, almost five years after the financing agreement was signed. To justify the delay, Camwater explains that the second phase was to start after the completion and reception of phase 1. That reception was delayed by “late connections to the power grid” and the acceptance finally took place in 2020.
The first phase began in 2014, covering the towns of Bafoussam, Bamenda, Kribi, and Sangmélima.
For Camwater, apart from the delays in the completion of phase 1, the second phase was not launched because relations between Cameroon and Eximbank were "quite strained" between 2021 and 2022. The strained relations “slowed the launch and even the continuation of some cooperation projects with China over the said period,” Camwater says.
The works, to be carried out by CGCOC Group CO Ltd over 36 months, will boost water production capacity and extend the distribution network in the target towns.